Third-party acquisition

Acquisition by a Third Party - In real estate law, “acquisition by a third party” refers to the acquisition of ownership of a property by a person who is not a direct party to the original sale transaction. The classic example is the acquisition in good faith from an unauthorized seller under § 892 of the German Civil Code (BGB): Anyone who acquires a property in reliance on the accuracy of the land register becomes the owner even if the registered seller was not actually authorized to dispose of the property.

Acquisition in Good Faith under Section 892 of the German Civil Code (BGB)

The land register enjoys public faith - the acquirer may rely on the entries. Acquisition by a third party in good faith is possible if: the transferor is registered as the owner in the land register, the acquirer acts in good faith (no knowledge or grossly negligent ignorance of the inaccuracy), and no objection to the accuracy of the land register has been entered. In this case, the true owner loses ownership and is left with only claims for damages against the unauthorized party.

Acquisition in good faith protects legal transactions and confidence in the accuracy of the land register-without this protection, every real estate acquisition would be fraught with considerable uncertainty. The legislature has deliberately struck a balance here between protecting the true owner and protecting the bona fide purchaser: The purchaser who relies on the land register is given preference-at the expense of the party who failed to secure their rights in a timely manner.

The purchaser’s good faith is not a passive stance in this context: If there are concrete indications in the context of the purchase that the land register might be inaccurate-for example, if the seller himself points out ambiguities, if there is an obvious discrepancy between the purchase price and market value, or if the purchaser has knowledge of third-party claims from other sources (e.g., an ongoing legal dispute) - the protection afforded by good faith ceases to apply.

Protection Against Unwanted Acquisition by a Third Party

Owners can protect themselves against an unauthorized acquisition by a third party by having an objection entered in the land register pursuant to § 899 BGB. This objection destroys the good faith of potential purchasers and prevents acquisition in good faith. A notice of transfer (Section 883 of the German Civil Code) also protects the buyer from the seller selling the property to a third party in the meantime. In practice, the notary arranges for the notice to be filed immediately after the purchase agreement is notarized-usually on the same day via express notification to the land registry office.

Protection against third-party acquisition is particularly relevant in the following situations: in complex inheritance cases with multiple heirs, in the event of the seller’s insolvency, in the event of enforcement measures by the tax office or other creditors, and in cases where the land register cannot be corrected immediately for formal reasons. In all these cases, we recommend instructing the notary to apply for the priority notice of conveyance immediately after notarization. The period between notarization and land registry entry-which can take several months depending on the land registry office-is the critical phase during which the priority notice of conveyance effectively protects the buyer.

Third-Party Acquisition in Foreclosure Auctions

A special case of third-party acquisition is the purchase in the context of a foreclosure auction. Here, the highest bidder acquires ownership by virtue of an act of public authority-regardless of whether the debtor subject to the auction had other obligations. Third-party rights that were not taken into account in the bidding process are extinguished upon the award of the property. This means: Buyers in foreclosure auctions acquire the property free of certain junior encumbrances but must assume the senior rights (in particular, first-priority land charges). Before participating in a foreclosure auction in Nuremberg or the surrounding region, a thorough analysis of the land register and the minimum bid is therefore strongly recommended.

Practical Tip for Buyers in Nuremberg

We recommend that buyers in the Nuremberg metropolitan region obtain a current land registry extract before purchasing and check it for objections, preliminary notices, and unusual entries. In the case of foreclosure auctions and inheritances-both of which are not uncommon in Nuremberg-the risk of an erroneous land registry is increased. Anyone purchasing a property from an estate in bankruptcy or from a community of heirs should check particularly carefully whether the persons disposing of the property are in fact all authorized to sell it. This applies in particular to properties from estates, where unresolved inheritance relationships or missing additions to the certificate of inheritance can temporarily render the land register inaccurate. If in doubt, have a notary verify whether the seller’s authority to dispose of the property is fully documented. The cost of a thorough review is minimal compared to the consequences of a voidable acquisition.

Frequently Asked Questions

Can a third-party acquisition be reversed?

A bona fide third-party acquisition under Section 892 of the German Civil Code (BGB) is final-the true owner irrevocably loses their right. Reversal is only possible if the purchaser was not acting in good faith (i.e., knew of the inaccuracy in the land register or was grossly negligent in failing to know) or if an objection was entered in the land register. In these cases, the true owner may demand correction of the land register pursuant to § 894 BGB and enforce it through the courts. The purchaser whose third-party acquisition is rescinded, in turn, has claims against the seller for repayment of the purchase price and damages. In practice, such cases are rare because the land registry system in Germany is generally very reliable-but they can occur in complex succession situations or cross-border inheritance cases.

Does acquisition in good faith also apply to gifts?

No. Acquisition in good faith under Section 892 of the German Civil Code (BGB) requires a transaction for consideration. In the case of a gift (acquisition without consideration), the protection of public faith does not apply-the donee does not acquire ownership if the donor was not authorized to dispose of the property. This applies accordingly to mixed gifts where there is a significant imbalance between the gift and the consideration. Thus, anyone who acquires real estate significantly below market value (e.g., from an over-indebted relative) may not be able to rely on the protection of acquisition in good faith. In such cases, courts examine whether the consideration is so far below market value that the acquisition is effectively to be regarded as gratuitous.

What is the difference between third-party acquisition and a third-party objection action?

Third-party acquisition concerns the acquisition of ownership by a third party based on the public faith in the land register. The third-party objection (§ 771 ZPO) is a legal remedy by which a third party defends against the enforcement of a claim against their property-for example, if a creditor of the previous owner seeks to seize a property that has already been sold, even though a priority notice of conveyance has already been registered. In practice, the third-party opposition action is a last resort: The new owner or the buyer protected by a priority notice of conveyance must take active steps to stop unauthorized enforcement against their property. Both terms concern the protection of third parties against the actions of others, but they pertain to different areas of law and have different legal consequences.

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